Introduction: Welcome to the Tokenverse
Fund tokenisation is revolutionising the investment landscape, making asset management more efficient, transparent, and accessible. At its essence, this process transforms traditional fund units into blockchain-based tokens, enabling investors to trade and transfer ownership with the speed and ease of digital assets – all while adhering to regulatory requirements. Unlike cryptocurrencies, these tokens are fully backed by real-world assets, blending innovation with security.
Leading financial institutions, from asset managers like Janus Henderson to regulatory centres such as Abu Dhabi, are actively exploring fund tokenisation to modernise investment structures. A notable example is Janus Henderson’s $11 million Anemoy Liquid Treasury Fund 1 , which employs tokenisation to enhance liquidity and accessibility. Likewise, Abu Dhabi’s Realize T-BILLS Fund 2 represents an ETF transformed through tokenisation, highlighting the rising institutional interest in this innovation. Luxembourg, a long-established financial hub, is also positioning itself at the forefront of tokenised funds 3 , drawing on its regulatory expertise and market infrastructure.As tokenisation gains traction, understanding its fundamentals, benefits, and challenges is crucial for investors and industry players. Let’s break it down, step by step.
I. Fund Tokenisation Explained
At its core, fund tokenisation is the process of converting traditional fund units into blockchain-based tokens. Instead of dealing with paper-based transactions, manual record- keeping, and slow settlement processes, investors can hold digital representations of fund shares on a secure and transparent blockchain. This makes transactions faster, more efficient, and easier to track. One key distinction to make: tokenised funds are not cryptocurrency. Unlike Bitcoin or other volatile digital assets, tokenised funds are fully regulated and backed by real-world assets, such as stocks, bonds, or real estate 4 . Think of tokenisation as modernising the way fund shares are managed – without changing their underlying value or risk structure. A useful approach to understanding asset management is to view it as the evolution of traditional processes, digitising ownership and optimising fund transactions for greater efficiency. By replacing cumbersome paperwork and outdated methods with streamlined digital solutions, investors experience a more efficient and modernised approach to fund management. This transformation is well underway. Norton Rose Fulbright 5 highlights tokenisation as a key driver in the evolution of investment funds, enhancing efficiency and lowering costs.
2. Key Benefits – How Tokenisation Enhances Investment Management
Enhanced Liquidity: Streamlining Transactions
One of the primary advantages of tokenised funds is improved liquidity. Unlike traditional fund shares, requiring multiple days to settle, tokenised assets facilitate near-instant transactions. This enables investors to enter or exit positions with greater ease, as explained by Tommaso Cervellati 6 , State Street Blockchain Specialist: “Private assets are typically illiquid, affecting secondary market trading and increasing the liquidity premium demanded by investors. Tokenisation addresses liquidity limitations, offering investors the possibility of trading tokens on a blockchain network 24/7. On the issuer’s side, converting private assets into blockchain tokens can increase liquidity through cheaper and more secure transactions.”
Enhanced Transparency: Leveraging Immutable Ledgers for Security
Blockchain technology ensures that all transactions are permanently recorded on an immutable ledger, mitigating fraud risks and improving operational efficiency. Real-time verification of fund ownership and transaction history reduces reliance on intermediaries, minimising errors and delays.
Expanded Market Access: Enabling Fractional Ownership
Tokenisation facilitates fractional ownership, allowing investors to purchase smaller portions of traditionally high-barrier assets. This broadens access to investment opportunities previously limited to institutional investors and high-net-worth individuals. As explained for real estate by Alex Taylor, Business Development Lead at TISE 7 , “Traditionally, [these] investments require a significant capital investment whilst having lengthy transaction times and complex/prolonged legal processes. Tokenisation simplifies the whole process, allowing properties to be divided into tokens (digitally), enabling investors to purchase a fractional share/s of a property”.
Institutional Adoption: Growing Interest from Traditional Investors
While blockchain technology was once viewed with scepticism by traditional investors, major financial institutions such as BlackRock 8 and Fidelity 9 are now actively exploring tokenisation. As established market players integrate this innovation, broader industry adoption is
becoming increasingly evident.
Conclusion: The Future of Fund Tokenisation
Fund tokenisation presents significant advantages. However, its successful adoption depends on addressing key challenges. Regulatory frameworks such as the Markets in Crypto-Assets Regulation (MiCA) are establishing compliance standards, ensuring market integrity while simultaneously adding layers of complexity. Additionally, technological considerations, ranging from smart contract vulnerabilities to broader security risks, necessitate continuous refinement and oversight. Despite these challenges, industry momentum continues to grow. Leading financial institutions are actively integrating tokenisation, reinforcing its long-term viability rather than positioning it as a short-lived trend. However, widespread adoption will require coordinated efforts among asset managers, regulators, and technology providers to develop a secure, scalable, and regulatory-compliant infrastructure. As the industry evolves, one reality is becoming increasingly evident: traditional, paper-based fund management is gradually being phased out. The question is no longer whether tokenisation will redefine investment management, but rather when, and which organisations will take the lead in shaping this transformation.
For expert insights, industry trends, and real-world applications, visit the LHoFT. Our ecosystem brings together leading experts, financial institutions, and innovative start-ups developing cutting-edge tokenisation solutions. Explore our in-depth insights and see howfund tokenisation is shaping the future of finance.
Citation
Featured Image source: Midjourney
1 Financial Times (September 13, 2024) “Janus Henderson to follow BlackRock and Fidelity into tokenisation” https://www.ft.com/content/648f2249-5783-4e98-8412-4056f56ad1b0
2 Reuters (November 2, 2024) “Abu Dhabi firm to launch tokenised US Treasuries fund” https://gulfbusiness.com/abu-dhabi-firm-to-tokenise-us-treasuries/#:~:text=Realize%2C%20an%20Abu%20Dhabi based%20technology%20firm%2C%20has%20launched,be%20held%2C%20traded%20and%20transferred%20on%20a%20blockchain.
3 PwC “Banking Trends and Figures 2023 – Technology, an enabler of a threat?” https://www.pwc.lu/en/banking/docs/pwc-banking-luxembourg-trends-figures-2023.pdf
4 Smain Bouchareb (13 Sep 2024) “Tokenization of real world assets: why choose Luxembourg?” https://iqeq.com/lu/insights/tokenization-of-real-world-assets-why-choose-luxembourg/
5 Podcast “Understanding tokenization: Insights, challenges and opportunities” https://www.nortonrosefulbright.com/en/knowledge/publications/60edb8c8/understanding-tokenization
6 Tommaso Cervellati (January 17, 2025) “Tokenization of Private Assets: Unlocking Liquidity, Transparency, & Access in the Modern Investment Landscape” https://caia.org/blog/2025/01/17/tokenization-private-assets-unlocking-liquidity-transparency-access-modern
7 Alex Tailor (10 Feb 2025) “Tokenisation – the future of ownership?” https://tisegroup.com/news/2025/tokenisation-the-future-of-ownership/
8 Natalia Karayaneva (Mar 21, 2024) “BlackRock's $10 Trillion Tokenization Vision: The Future Of Real World Assets” https://www.forbes.com/sites/nataliakarayaneva/2024/03/21/blackrocks-10-trillion-tokenization-vision-the-future-of-real-world-assets/
9 Ian Allison (Jun 10, 2024) “Fidelity International Tokenizes Money Market Fund on JPMorgan’s Blockchain” https://www.coindesk.com/business/2024/06/10/fidelity-international-tokenizes-money-market-fund-on-jpmorgans-blockchain
